Subject: Cost and Management Accounting

Q.No.1 Indicate whether each of the following costs of an automobile manufacturer would be classified as
direct materials, direct labor, or manufacturing overhead.
(a) ____Windshield. (b) ____Engine
(c) ____Wages of assembly line worker. (d) ____Depreciation of factory machinery.
(e) ____Factory machinery lubricants. (f) ____Tires.
(g) ____Steering wheel. (h) ____Salary of painting supervisor.

Q.No.2 Classify the following accounts of The Bottlers Ltd (which sells beverages) under one or more of the
following headings:
 Manufacturing – Direct
 Manufacturing – Indirect (Overheads)
 Selling and Distribution
 Administration

S.No Accounts Headings or Classification

01 Samples
02 Sugar
03 Factory Payroll
04 Foreman’s salary
05 Conveyance and travelling
06 Factory’s clerical salaries
07 Drivers’ wages
08 Gas, oil and grease
09 Depreciation of furniture and fixtures
10 Salesman’s salary and commissions
11 Light and power
12 Legal and Audit fee
13 Freight out/Carriage outwards
14 Income tax
15 Advertising
16 Rent of office buildings
17 Labels
18 Depreciation on machinery
19 Insurance
20 Water
21 Truck tyres
22 Bottle breakages
23 Telephone and communication
24 Stationery

Q.No.3 Classify the following costs as Variable (V), Fixed (F), or Semi-variable (SV) in terms of their behavior
with respect to volume or level of activity.
a) Property taxes_______________
b) Maintenance and repair_______________
c) Utilities_______________
d) Sales agent’s salary_______________
e) Direct Materials_______________
f) Insurance _______________
g) Depreciation by straight-line _______________
h) Sales agent’s commission _______________
i) Depreciation by mileage- automobile _______________
j) Rent _______________

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